Precision Medicine, Industry Analysis and the Human Genome

Table of Contents

Executive Summary 3

Introduction 4

Fueled by Innovation 5

23andMe 6

Illumina 7

Conclusion 8

References 9

Executive Summary

This paper focuses on innovation and strategy within the fast cycle market of personal medicine initiative as it relates to data analysis and the human genome sequencing. Illumina, a San Francisco based company, is at the forefront of this innovation. The company’s main product is line is fast sequencers for genome typing and even complete entire genome sequencing. Compiling genetic information is a huge task and manipulating data requires software innovation including the use of block chain technology to process and make sense of miles of data. Data manipulation and storage have created the need for collaborative open-source software companies to manage and query data. Collaborative partnerships such as the one between Veritas Genetics and Microsoft combine the science of genetic sequencing and data manipulation. (Reporter, S. (2018, August 29)). This partnership and others like it are important to the growth of the personal medicine initiative.  Veritas has the capability to provide an entire personal genetic sequence to customers requesting the service. The company 23andMe provides less than 1% of your genetic data with a much more manageable price tag.  The difference in the two types of testing are huge. 23andMe is a genotyping service that is bringing personal medicine initiative to our homes. Currently 23andMe is facing tough competition and utilizing partnership strategies to gain market share.  The companies involved in are being compared to the 1970’s computer era. We are on the edge of great discovery and change with the advent of personal medicine innovation.

Introduction

The Human Genome project was declared complete in 2003. It was a publicly funded project initiated in 1990 to sequence the entire human genome. Work continues the interpretation and analysis of the genome data.

In 2015 Precision Medicine Initiative was unveiled by President Obama during his state of the union address. It was launched with a $215 million investment in the 2016 budget and will allow for innovative research and acceleration of biomedical discoveries. Precision medicine gives clinicians tools to better understand the complex mechanisms underlying a patient’s health, disease, or condition, and to better predict which treatments will be most effective. (President Obama’s Precision Medicine Initiative. (n.d.).

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Precision medicine is a shift in paradigm of traditional medicine. Instead of developing treatments for population we are now in a cultural transformation toward prevention, personalization and precision. Medicine today is based on disruptive technologies. Cheap genome sequencing, advanced biotechnology has all been producing a vast amount of data. The NIH is planning to launch a study, known as All of Us Research Program, which involves a million volunteers. They will provide genetic data and biological samples to source an open data sharing program. The advent of digital healthcare solutions is creating a growing sense of healthcare consumerism. Genetic testing companies’ startups were growing before the Precision Medicine Initiative was announced. This initiative will further fuel the drive for results.

Fueled by innovation

23andMe

23andMe was founded in 2006 by Anne Wojcicki along with Linda Avery and Paul Cusenza. The name 23andMe refers to the fact that human DNA is organized into 23 pairs of chromosomes. Within a year of its inception the company went live with their personal genome product. Co founder Anne Wojcicki believes access to personal genetic information puts the power of health management with the individual. 23andMe is a direct to consumer health service in which a customer prepares a saliva sample and sends it to a lab to be sequenced. The data is then analyzed by 23andMe for genotyping. Genotyping is the technology that detects small genetic differences. It refers to a set of genes in our DNA which are responsible for a genetic trait. 23andMe uses a single nucleotide polymorphisms (SNP) genotyping array that queries 0.1% of the human genome. (What is Genotyping? (n.d.)).  This SNP is a genotyping array is produced by Illumina. Wojcicki strategized to collect genetic information and sell the data for research related drug discovery and pharmaceutical applications. According to their website 23andMe has more than 5,000,000 customers, 80 percent of customers have opted in to participate in research. (Grothaus, M. 2015, (February 04)).  That is a lot of data, in fact it includes one billon phenotypic data points. The company’s strategic business model is business to business, selling data to a range of partners whose goal is to help humanity and cure disease. Wojcicki made a strategic response to competition with an innovative business model to provide data from the genetic test to drug research companies.

Anne Wojcicki is an entrepreneur with a mission to change the way we think about health care and transform how the world looked at genetics. Wojcicki, a Yale graduate started her career on Wall Street. She quickly became disillusioned with the lifestyle and changed careers to focus on health care. Anne Wojcicki’s leadership style is best described as transformational. Transformational leadership serves to enhance the motivation, morale, and job performance of followers through a variety of mechanisms. these include connecting the follower’s sense of identity and self to a project and to the collective identity of the organization.  (Transformational leadership. 2018, October 08).  Wojcicki mechanism’s include work life balance and a relaxed work day schedule. Her leadership style is also goal oriented with individual and team goals reporting on progress every six-months. Wojcicki forces team building with company catered lunches and a Thursday social integration day making sure everyone communicates regularly among coresponding teams. (Welch, L. 2012, May 29).

23andMe is facing the threat of substitute products from other genome typing companies such as Veritas Genetics.  Veritas has the capability to sequence your entire genome, at a much higher price. Ancestry.com is another competitor. Business strategy used by 23andMe to provide above average returns is to partner with drug discovery companies and keep costs low by strategic partnership with the powerful sequencing company, Illumina.

Illumina

Illumina is a San Francisco based company that was founded in 1998. Illumina is a leading Next-Generation Sequencing company that have developed sequencing and array technologies that are fueling groundbreaking advancements in human genotyping. Illumina dominants in the DNA sequencing market. Most if not all genetic testing services, use DNA sequencing machines produced by Illumina.

Jay Flatley chairs the Board of Directors for Illumina and its subsidiary, Helix. Flatley led Illumina as CEO from 1999 until 2016.  His leadership has said to have led the company from being one of innumerable start-ups to achieving world dominance in the field of genome sequencing. Illumina’s sales grew from $1.3 million to in 2000 to $2.2 billion in 2015.  (Fikes, B. J. 2017, July 15). It is no secret Flatley is a fan of Apple’s innovation model and their ability to create sudden discontinuous changes in technology and to disrupt industries.
Flatley believes it “doesn’t always mean that you’re first to market with every technology, but that when you do come, you come with the best technology that’s dramatically better.” (Jay Flatley, Executive Chairman of Illumina. 2018, April 25)

Illumina’s business strategy has been compared to the razor and blade model. A strategy or tactic that pairs a consumable sold at a loss with an item that generates profit. The threat to this model is competition selling products that are similar and perform just as well or better. Illumina sells very expensive genomic sequencing systems. In fact, they sell a machine HiSeq X Ten that sells as a set of instruments for more than $10 million.  To date Illumina has sold 35 machines. The strategy is to pair the machines with consumables that generate revenue.

Precision Medicine will drive the demand for Illumina’s products even higher.  The partnership between Illumina and 23andMe seems to be crucial to 23andMe’s success. Illumina has dominated the sequencing market and now has a spin-off that directly competes with 23andMe, Helix.  Helix uses a genotype chip that codes for about 2% of person’s total DNA. But instead of giving data to pharmaceutical companies Helix has partnered with companies that allow people to buy specific bits of information. Helix is offering an app store in which customers can purchase future genetic testing results. Helix even offers a test that will make wine recommendations tailored to your taste preferences based on your DNA results. The addition of Helix is a second mover strategy that follows Jay Flatley’s philosophy, second movers have the advantage of innovation. Time to develop technology and improve on processes and fill the gaps competitors missed.

Conclusion

The precision medicine and current state of genetic testing is a fast cycle market that is driven by innovative testing and genetic science. 23andMe has faced tough FDA standards and the current administration is looking to overhaul guidelines for mail order genetic testing products.  Many analysts tout this era is poised for great advances in medicine. Competition is growing within the field and is affected by price, innovation, design and variety. Genetic testing companies face the threat of new entrants to market and threat of substitute products. The bargaining power of suppliers of genetic testing equipment such as Illumina’s sequencing machines will affect the long-term success of companies providing the mail order tests. Suppliers can affect the market by raising prices or reducing quality of inputs.

References

• Education. (n.d.). Retrieved from http://www.personalizedmedicinecoalition.org/Education/The_Basics
• FACT SHEET: President Obama’s Precision Medicine Initiative. (n.d.). Retrieved from https://obamawhitehouse.archives.gov/the-press-office/2015/01/30/fact-sheet-president-obama-s-precision-medicine-initiative
• Farr, C. (2017, May 02). Illumina, Secret Giant of DNA Sequencing, Is Bringing Its Tech To The Masses. Retrieved from https://www.fastcompany.com/3061591/illumina-owns-the-dna-sequencing-market-now-its-building-an-app-store-too
• Fikes, B. J. (2017, July 15). Illumina’s Jay Flatley named to Entrepreneur Hall of Fame. Retrieved from http://www.sandiegouniontribune.com/business/biotech/sd-me-flatley-connect-20170713-story.html
• Grothaus, M. (2015, February 04). How 23andMe Is Monetizing Your DNA. Retrieved from https://www.fastcompany.com/3040356/what-23andme-is-doing-with-all-that-dna
• Illumina Partners with Start-Up 23andMe to Enter Nascent ‘Consumer Genotyping’ Market. (2007, August 10). Retrieved from https://www.genomeweb.com/arrays/illumina-partners-start-23andme-enter-nascent-consumer-genotyping-market-0#.W-C8DJNKi70
• Reporter, S. (2018, October 31). 23andMe Gains FDA Market Authorization to Sell PGx Test Reports Directly to Consumers. Retrieved from https://www.genomeweb.com/regulatory-news/23andme-gains-fda-market-authorization-sell-pgx-test-reports-directly-consumers#.W9paAJNKjIU
• Reporter, S. (2018, August 29). Nebula Genomics Raises $4.3M, Partners with Veritas. Retrieved from https://www.genomeweb.com/sequencing/nebula-genomics-raises-43m-partners-veritas#.W9pXYZNKjIV
• Speights, K. (2017, March 21). Here’s Why the Best Is Yet to Come for Illumina, Inc. Retrieved from https://www.fool.com/investing/2017/03/21/heres-why-the-best-is-yet-to-come-for-illumina-inc.aspx
• The DNA Day interview: Jay Flatley, Executive Chairman of Illumina. (2018, April 25). Retrieved from https://blog.helix.com/jay-flatley-interview/
• Transformational leadership. (2018, October 08). Retrieved from https://en.wikipedia.org/wiki/Transformational_leadership://en.wikipedia.org/wiki/Transformational_leadership
• Welch, L. (2012, May 29). The Way I Work: Anne Wojcicki, 23andMe. Retrieved from https://www.inc.com/magazine/201206/liz-welch/the-way-i-work-anne-wojcicki-23andme.html
• What is Genotyping? (n.d.). Retrieved from https://www.thermofisher.com/us/en/home/life-science/pcr/real-time-pcr/real-time-pcr-learning-center/genotyping-analysis-real-time-pcr-information/what-is-genotyping.html
• https://www.genomeweb.com/sequencing/nebula-genomics-raises-43m-partners-veritas#.W9pXYZNKjIV
• https://www.xcode.life/23andme-raw-data/23andme-raw-data-analysis-interpretation/